Are Prediction Markets Legal in the US? State-by-State Guide

Last updated: June 2026

Prediction markets sit in a legal gray zone in the US right now. They are regulated federally by the Commodity Futures Trading Commission, the CFTC, which says they are legal nationwide. But a bloc of states call sports event contracts illegal gambling and are fighting it in court, so where you can actually trade depends on your state and which platform you use.

This guide is written for US readers, since prediction markets are mostly a US story, with a section near the end on the UK and Australia. It is a snapshot of a fast-moving fight as of June 2026. We cover the two main platforms, Kalshi and Polymarket, give you the status in all 50 states, and walk through the court battles deciding it all.

What this guide covers

• The quick answer
• What counts as a prediction market
• Who regulates prediction markets
• Is it gambling or investing?
• Legal status in all 50 states
• The state court fights, explained
• The CFTC’s 2026 proposed rule
• The UK and Australia
• Is your money safe?
• FAQ

The quick answer

In most states you can legally use a regulated prediction market today. They are overseen by the CFTC, a federal financial regulator, not by state gaming boards.

The friction is in a group of about 17 states that say sports event contracts break their gambling laws. In a handful, a court has ordered the platforms to pause certain markets. In others, the operators keep running while the lawsuits play out. Kalshi fights to stay in every state. Polymarket’s US arm takes the safer route and blocks the states where the fight is hottest. Scroll to the state grid for your state.

What counts as a prediction market

A prediction market lets you buy a yes-or-no contract on whether a real-world event happens. Each contract settles at one dollar if you are right and zero if you are wrong.

So a “Yes” on “Will the Fed cut rates in September?” priced at 70 cents pays a dollar if they cut, and nothing if they hold. The price is the crowd’s odds in disguise. Politics, the economy, the weather, awards shows and sports are all fair game. If you want the longer beginner explainer, start with our prediction markets guide.

Who regulates prediction markets

The CFTC regulates prediction markets at the federal level, treating event contracts as a type of derivative, the same broad family as futures on oil or wheat.

That matters because of a legal idea called federal preemption. When Congress hands one federal agency clear authority over an activity, that authority can override conflicting state rules. Kalshi’s whole legal strategy rests on it: if the CFTC has exclusive say over event contracts, then a state gaming board cannot ban them, even when the contract is about a ball game. The platforms that operate this way must follow real financial rules, including holding customer money in segregated accounts and guarding against market manipulation.

States see it differently. They argue that a bet on a game is a bet on a game, that Congress never meant to turn a financial regulator into the country’s sports betting authority, and that licensing and taxing that activity is their job. Courts have not settled which side is right, which is exactly why the map below is so patchy.

Is it gambling or investing?

The honest answer is that it is both, depending on the contract. A market on inflation behaves like a hedge. A market on Sunday’s game behaves like a bet.

The platforms and the CFTC defend the markets on “price discovery” grounds: they pull in information and let people hedge real risks, which is what financial markets are for. The other side points at the volume. By early 2026, roughly 87 percent of the money traded on Kalshi was riding on sports, which makes the financial-product label a hard sell to a state regulator. Our take is plain. The economic markets are a real financial tool. The sports markets are sports betting wearing a suit. Neither is shameful, but if you are trading a game with money you cannot afford to lose, the app’s category in the store does not change what you are doing. Treat it like any wager and read our responsible gambling hub if it stops being fun.

Prediction market legal status in all 50 states

Here is where each state stands as of June 2026. We use three labels. Open means no known state enforcement, and the platforms operate under CFTC rules. Contested means a state has acted or sued, but trading often continues while the case runs. Restricted means a court has ordered a pause, criminal charges are filed, or a ban is law, so expect limited or no access.

This is a fast-moving fight and the labels can change with a single court ruling. Treat it as a starting point, not gospel, and confirm with the operator at sign-up.

By platform, the hard facts. Kalshi takes the position that it is legal in all 50 states under CFTC authority and keeps operating in most while it litigates, though courts have ordered it to pause certain contracts in Nevada and Massachusetts, and it faces active enforcement in several more.

Polymarket’s US arm is more cautious. It currently blocks Arizona, Illinois, Massachusetts, Maryland, Michigan, Montana, New Jersey, Nevada and Ohio, and it will be unavailable in Minnesota once that state’s ban takes effect on August 1, 2026.

The state court fights, explained

The whole question comes down to one issue working its way through the courts: does federal CFTC authority override state gambling law? Judges have landed on both sides.

The biggest win for the industry came in New Jersey. In April 2026, a federal appeals court ruled that New Jersey’s gaming regulators could not bar Kalshi, finding the CFTC has exclusive jurisdiction. That is the strongest signal yet that preemption holds, and it is why Kalshi feels confident pushing into hostile states.

But the wins are not one-sided. In Nevada, a judge first let Kalshi keep running, then dissolved that protection, and the state has pushed to make the platform stop sports, election and entertainment markets for people in Nevada. A Massachusetts court barred Kalshi from offering sports contracts without a state license. In Maryland, a federal judge refused to shield Kalshi from state enforcement. Arizona went furthest of all, filing criminal charges against Kalshi over illegal gambling and election wagering. Michigan’s attorney general is chasing a permanent injunction. Tennessee went the other way, with a court protecting Kalshi while its case runs.

Then there is the federal counterattack. Rather than wait to be sued, the CFTC has gone after states that try to crack down, filing its own suits against a group that includes Arizona, Connecticut, Illinois, Kentucky, New York, New Mexico, Minnesota, Rhode Island and Wisconsin. The result is a true patchwork, where the same contract can be legal in one state and the subject of a criminal charge in the next.

The CFTC’s 2026 proposed rule

The fight may get settled from the top. On June 10, 2026, the CFTC published a proposed rule to spell out, federally, which event contracts are allowed.

As drafted, it would permit most sports event contracts, on the logic that they aid price discovery, while banning the contracts most open to manipulation, such as bets on individual player injuries, referee decisions or one-off in-game events. The proposal went out for a 45-day public comment period. If it is finalized close to its draft form, it would hand the platforms a strong federal footing for mainstream sports and politics markets, and likely narrow the ground states have to fight on. It would not end the gambling-versus-finance debate, but it would give the courts and the operators a clearer federal rulebook. Watch this one, since it could reshape the whole map above.

Prediction markets in the UK and Australia

Outside the US, the picture is different, because the big US platforms are built around US rules and mostly geo-block other countries.

In the UK, betting on outcomes is the job of the UK Gambling Commission, the UKGC, under the Gambling Act 2005. Brits already have licensed betting exchanges like Betfair and Smarkets that work in a similar back-and-forth way, and financial-style bets on markets fall to the Financial Conduct Authority, the FCA, through licensed spread-betting firms. Kalshi and Polymarket are not UK-licensed gambling operators, and UK users are generally blocked. So the nearest legal equivalent is a UKGC-licensed exchange, not the US apps.

In Australia, online betting sits under the Interactive Gambling Act 2001, policed by the Australian Communications and Media Authority, the ACMA, with licensed bookmakers regulated at state level. Offshore prediction markets are not licensed for Australian customers and are typically blocked. Australians who want to bet on an outcome legally use a licensed local bookmaker, within the limits Australian law puts on novelty and event betting. As always, this is general information, not legal advice for your situation.

Is your money safe?

The regulated US platforms hold customer funds in segregated accounts and answer to the CFTC, which is real protection against the operator misusing your money. It is not protection against losing your bet.

Keep a few things straight. Segregated does not mean bank-insured, so a prediction market balance is not covered the way an FDIC-insured savings account is. Prices move fast on news, and a contract can swing hard against you in minutes. Winnings can be taxable, so keep your own records. And the regulated status of a platform tells you nothing about whether a given trade is a good idea. If you find yourself chasing a loss, that is the signal to stop. The help lines in our footer are there for prediction markets just as much as for casinos. Questions about this guide? Email editorial@chipreign.com.

Frequently asked questions

Are prediction markets legal in the US?

At the federal level, yes. Prediction markets are regulated by the CFTC, which treats event contracts as legal financial instruments. The dispute is at the state level, where a number of states say sports contracts break their gambling laws. So legality can depend on your state, and the courts have not settled the question.

Is Kalshi legal in my state?

Kalshi operates in most states and takes the position that it is legal in all 50 under federal CFTC authority. Courts have ordered it to pause certain contracts in Nevada and Massachusetts, and it faces active enforcement in several states including Arizona, Maryland and Michigan. Check our state grid above and confirm on Kalshi at sign-up.

Is Polymarket legal in the US?

Yes, through a CFTC-regulated US arm it launched in 2026 after buying a licensed exchange. It is available in most states but takes a cautious approach, blocking Arizona, Illinois, Massachusetts, Maryland, Michigan, Montana, New Jersey, Nevada and Ohio, with Minnesota dropping off once its ban starts on August 1, 2026.

Are prediction markets the same as gambling?

Legally they are treated as financial contracts, not gambling, which is the entire basis for federal regulation. In practice, a contract on a sports result functions much like a bet, and most trading volume is on sports. We think the economic markets are a genuine financial tool and the sports markets are betting in another form. Either way, treat the risk seriously.

Which states have banned prediction markets?

Minnesota has passed an outright ban that becomes law on August 1, 2026. Several other states have not banned them outright but have taken strong action, including Arizona with criminal charges, and Nevada, Massachusetts, Maryland and Michigan with court orders or enforcement that restrict the platforms. The list is changing, so check the grid above.

Do I pay tax on prediction market winnings?

Generally, yes. Profits from prediction markets are taxable income in the US, and platforms may issue tax forms. Exactly how it is reported can depend on the platform and your situation, so keep your own records of trades and talk to a tax professional. This is general information, not tax advice.

Is my money safe on a prediction market?

On a CFTC-regulated platform, your funds are held in segregated accounts, which protects against the operator misusing them. That is not the same as being bank-insured, and it does nothing to protect you from losing a trade. Only trade with money you can afford to lose.

Can I use Kalshi or Polymarket in the UK or Australia?

Generally no. Both are built around US regulation and block most other countries. UK users are served by UKGC-licensed betting exchanges such as Betfair and Smarkets, and FCA-regulated spread-betting firms. Australians use locally licensed bookmakers under the Interactive Gambling Act 2001. The US apps are not licensed for UK or Australian customers.

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